|Understand retail property performance.|
In managing retail property or large shopping center there are plenty of things that can occur and that can create lots of ‘pain’ in the performance of the property. It is critical that you have a property business plan that will help you avoid the chaos of poor property performance and the pressures that come with that.
In an ideal world a good property manager with lots of retail experience should be able to see many of the problems in advance and lessen the impact of issues and challenges. Here are some of the bigger problems to look for:
- A weakening tenant mix
- A rise in the vacancy factor
- Customers shopping elsewhere
- Low levels of sales in the tenant mix
- Renovation issues in property presentation
- Expenditure pressures in operational costs
- Expansion and contraction of tenants in occupancy
- Shifts in anchor tenant focus or success
- Image and branding of the property
As you can see from the topics that knowledge and skills are required to solve or address the issues. That is where the property manager is an important part of the solution.
Here are some factors that will help when it comes to property performance and retail centre management.
- Pressures in the tenancy mix will change from time to time. That can be due to a shift in product offering on a tenant by tenant basis, or the lack of retail skills of particular tenants. You can also get problems with the clustering and tenancy placement.
- It is wise to maintain regular and close contact with all of the tenants in the property to stay ahead of problems. In a large shopping centre meetings with tenants should occur at least monthly. Keep records and notes from all discussions. Look for relationship and performance issues with each tenancy and across the mix. Address any trading issues early so that they do not frustrate sales across the broader mix.
- Most medium to large shopping centres will track the levels of sales for each tenant and across all retail categories; they will do that through the lease terms and conditions allowing the sales tracking process. In that way they can identify any downturn in trade, or tenant weakness. Each month the levels of sales performance can be tracked across the property and within the retail categories. You will soon see that some segments of retail trade are performing better than others. That is where a process of balancing tenant placement is required and the tenant mix strategy becomes so important in leasing.
- Your retail property can and should be compared to the industry averages and other properties locally. The comparisons should occur across the key market indicators such as a market rental, expenditure management, net income, vacancy factors, customer numbers, lease strategies, clustering, sales, and tenancy mix. To help the process, the property business plan should incorporate targets and strategies in each case.
- Monitor the changes in the local area when it comes to customer numbers, customer demographics, and retail spending patterns. Pressures from the economy and the local area will have direct impact on shopping centre performance.
- Develop a strategic marketing plan that applies to the property itself and the existing tenancy mix; align those factors to the local community and your customer targets. Every good retail property should have a comprehensive marketing plan implemented across the trading year. Seasonal shopping festivities such as Easter and Christmas should be merged into the marketing strategy and systematically promoted into the local area.
- Understand exactly who your customers are, where they come from and why. Create strategies that will allow the customers to improve visit numbers and sales results across the tenancy mix. Some of your tenants are likely to be real ‘draw cards’ for customer visitation; understand the attraction factors and those tenancies so that you can build the successes of strong tenants into the broader success of the entire property.
A successful retail property is a well-balanced mixture of specialty tenants, anchor tenants, customers, product offerings, the landlord, property financiers, and net property performance. That is where the experience of the shopping centre manager becomes critical to the complete equation.
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